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Fed retirees to see 1.7 percent COLA increase in 2013

By
Jolie Lee

Federal retirees will see their cost-of-living adjustments increase by 1.7 percent
next year.

Social Security recipients received a 3.6 percent
increase in benefits this year
after getting none the previous two years. Meanwhile, the increase is more than
the Congressional Budget Office's estimate earlier this year of 1.38 percent.

The increase means more than 56 million Social Security recipients will see their
monthly payments go up by 1.7 percent next year. Social Security also provides
benefits to millions of disabled workers, spouses, widows, widowers and children.
The COLA announcement affects about 1 in 5 U.S. residents.

The increase will be the same for federal retirees under the current Federal
Employees Retirement Systems (FERS) as well as the legacy Civil Service Retirement
Systems (CSRS).

Social Security payments for retired workers average $1,237 a month, or about
$14,800 a year. A 1.7 percent increase will amount to about $21 a month, or $252 a
year, on average.

The increase, which starts in January, is tied to a measure of inflation released
Tuesday. Inflation has been relatively low over the past year,
despite the recent surge in gas prices, resulting in one of the smallest increases
in Social Security payments since automatic adjustments were adopted in 1975

The National Active and Retired Federal Employees said it was "pleased" that
retirees will receive some relief from rising costs.

"NARFE continues to support strong COLAs based on fair assessments of increases in
consumer prices, including medical costs, to keep federal annuities in line with
inflation," said NARFE president Joseph A. Beaudoin in a statement.

Federal union American Federation for Government Employees pointed out the COLA
was "much smaller" than this year's increase, but noted that the situation could
be worse under the Simpson-Bowles deficit-reduction plan.

"Under the deficit reduction plan proposed by Morgan Stanley Director Erskine
Bowles and ex-Senator Alan Simpson, the annual COLA would be cut by three-tenths
of a percentage point. So if Bowles-Simpson were in effect today, retirees would
be getting a 1.4% adjustment in January instead of the 1.7% increase," said AFGE
National President J. David Cox in a statement.

The COLA increase, however, may be offset by increases in health care, according
to a release from the Social Security Administration.

"For some beneficiaries, their Social Security increase may be partially or
completely offset by increases in Medicare premiums," the statement said.